Open Contracting through the Procurement Act (UK0107)

Our Commitment

Open contracting is at the heart of the government's Transforming Public Procurement Programme. Our commitment is to deliver the Procurement Act 2023 and secondary legislation, and strengthen implementation through a government Learning and Development Programme, enhanced digital platform, and support the development of the civil society procurement community. Together, these will enable the most benefit to be gained from the improved transparency the reforms will bring.

Our Analysis

Cabinet Office reported on the open contracting aspects of the transforming public procurement programme to meetings of the UK Multi-Stakeholder Forum. A revamped advisory group was formed with civil society members who had contributed to the development of previous national action plan commitments. The group meets regularly with the Cabinet Office providing in depth briefings on the Procurement Bill, the supporting work on digital systems and the associated learning and development programme. The group’s focus for the Sixth National Action Plan for Open Government (NAP6) was informed by the UK Co-Creation Brief 2023 written by the Open Government Partnership’s Independent Reporting Mechanism (IRM) and the outcome of discussions about the public outreach phase at the Multi-Stakeholder Forum (MSF) on 22nd June. Civil society members submitted a comprehensive input, eight relevant submissions were made covering at least five topics, during the NAP6 outreach stage. Cabinet Office analysis concluded that there is strong potential for Open Contracting due to a diverse set of interlinked suggestions and a clear and coherent stakeholder group through the Open Contracting Advisory Group. Civil society presented an overview of the submissions at the group meeting on 18 July 2023. The proposals from the eight relevant submissions varied considerably in the scope and complexity of their proposals; the Cabinet Office identified almost 90 individual proposals that can be grouped into about forty topics. During September, October and November civil society worked with Cabinet Office to assess suitability for inclusion and prioritise them as NAP6 deliverables and milestones in support of the Transforming Public Procurement programme covering: ● The Procurement Act; ● Associated Secondary legislation; ● Learning and Development Programme; ● Enhanced digital platform; and ● Additional Specific Deliverables with a civil society focus.

The Problem

One in every three pounds of public money, some £300 billion a year, is spent on public procurement. By improving the way public procurement is regulated, the Government can save the taxpayer money and drive benefits across every region of the country. Following the UK’s exit from the EU, we now have an opportunity to develop and implement a new procurement regime. Following wide-ranging public consultation and stakeholder engagement, we have brought forward legislative proposals to establish the new regime. The Procurement Act helps to grow the economy by creating a simpler and more transparent system that will deliver better value for money, reducing costs for business and the public sector. The Government wants to make it easier for small businesses to work with the public sector by removing unnecessary rules and tackling late payment in the supply chain. Public bodies will have to consider SMEs when designing their procurements. As set out in our Transparency Ambitions for the new UK procurement regime, we have made great strides in creating a more transparent public procurement system, but our current arrangements are limited in a number of ways: ● Disparate and unconnected datasets; ● No single picture of procurement agreements; ● Lots of data, little insight; ● Lack of organisational identifiers. Further, the government’s National Procurement Policy Statement states that public procurement should be leveraged to support priority national and local outcomes for the public benefit. This includes creating new businesses, new jobs and new skills, tackling climate change and reducing waste, improving supplier diversity, and stimulating innovation and resilience. More transparency will enable the many civil society organisations focused on these areas to collaborate with contracting authorities and contractors around these important policy issues.

Our Solutions

The Procurement Act 2023 will replace the current EU regime for public procurement by: ● Creating a simpler and more flexible commercial system that better meets our country’s needs while remaining compliant with our international obligations. ● Opening up public procurement to new entrants such as small businesses and social enterprises so that they can compete for and win more public contracts. ● Taking tougher action on underperforming suppliers and excluding suppliers who pose unacceptable risks. ● Embedding transparency throughout the commercial lifecycle so that the spending of taxpayers’ money can be properly scrutinised and collecting information that will help analyse the overall health and fairness of the UK procurement market.

The main benefits of the Act include creating an open and transparent system – everyone will have access to public procurement data. Citizens will be able to scrutinise spending decisions. Suppliers will be able to identify new opportunities to bid and collaborate sooner in the process, and this will improve competition because suppliers will find it easier to plan and gear up. Buyers will be able to analyse the market and benchmark their performance against others, for example on their spend with SMEs. The reforms will provide everyone with access to the highly valuable information in the UK’s £300bn public procurement market, increasing public trust and improving commercial outcomes in UK government spending. In the current National Procurement Policy Statement the government recognised that using common benchmarks and standards allows the many examples of best practice in public procurement to be shared across all contracting authorities. This enables a culture of continuous improvement in procurement practice and capability, to not only save the taxpayer money but also drive sustainable economic growth. The government also recognised that contracting authorities should act to ensure their procurement and commercial teams have the right capability and capacity to deliver the priorities in the National Procurement Policy Statement. This will ensure transparency in public procurement to support engagement with the market, allow proper scrutiny of procurement decisions, and demonstrate good custodianship of public money.

Transparency will be enhanced by: ● More procurement data being published in a standard, open format using the Open Contracting Data Standard (OCDS) and other standards, so decisions on how public money is spent can be more easily analysed by civil society and other reasonable parties. ● Larger contracting authorities planning to award larger contracts will have to publish ‘pipelines’ of their future procurements so that suppliers can gear up and prepare to bid, especially SMEs where they need time to collaborate and form consortia. ● Open contracting will help to transform contracting authorities' approach to data to help improve decision-making and innovation at all levels of government.

The new Procurement Act will give procurers greater commercial freedom and flexibility to design procurement processes that meet their exact needs and drive innovation. It will open up public procurement further to smaller businesses and social enterprises so they can compete for more contracts. New requirements will embed transparency throughout the contract lifecycle, so everyone can access procurement data and see how public money is spent. A stronger exclusions framework will make it easier for procurers to exclude suppliers that present unacceptable risks. The new notices will include information that is important to assessing the health of the UK marketplace such as the number of bids. The Procurement Act received Royal Assent on 26 October 2023. We expect the new regime to go live in 2024, with at least 6 months’ advance notice. The development of secondary legislation will enable the implementation of the Act. This roll-out will be supported by a Learning and Development Programme for anyone whose work touches on procurement, including procurement and commercial practitioners, and suppliers. In addition to the core programme for practitioners, we will develop approaches to support the broader use of contracting data, such as communities, strategies, conferences, guidance, and research into benefits and costs. In addition to the core programme for commercial and procurement practitioners we will:

● Publish transparency user guidance including on topics raised by civil society in the NAP consultation The new transparency user guidance will take account of civil society suggestions and concerns around open contracting. The guidance will be in the form of straightforward questions and answers addressing key issues in the context of the Procurement Act 2023 and its implementation. The guidance will provide a user friendly explanation of how the aspects of reform will work in practice. For example, the guidance will address how the withholding of sensitive commercial information under s.94 of the Procurement Act 2023 should be treated by contracting authorities.

● Publish regular updates on system readiness Third party providers of e-procurement systems (‘eSenders’) will need to integrate the publishing of notices in their systems with the new Transparency Platform. The Cabinet Office will publish and regularly update a list of eSenders who have committed to completing this integration work.

● Overseeing compliance with the new legal regime The Procurement Review Unit (PRU) will be responsible for overseeing compliance with the new legal regime and will monitor the data being published by contracting authorities to identify systemic or institutional breaches that may result in an investigation. The PRU will publish reports on the investigation outcomes. As the PRU is mobilised it will continue to work with stakeholders to ensure triggers for investigation are set at the appropriate levels. As part of this work, the government will seek input from civil society and other stakeholders who use the data. The government will also collaborate on ways to get actionable insights from the data. This collaboration may take the form of communities of practice and/or data use conference referenced in the other commitments in this document.

● Develop a Data Strategy, including capability to use data The data strategy will set out the long term direction of the data aspects of public procurement reform, including the capacity for use of their data by all contracting authorities in order to do their jobs better and drive change. Civil society will be engaged in the development of the data strategy. The data strategy will align with the government’s National Data Strategy elements and the Government Data Quality Framework.

● Create a civil society-led open contracting community of practice A community of practice will enable civil society to access learning and development materials and create a forum for discussing aspects of interest to civil society. Examples of issues of concern to civil society include issues of data quality from the central digital platform and the withholding of sensitive commercial information by contracting authorities. This community will become a locally managed community of practice that will feed information to the main Transforming Public Procurement community. Where needed, the main community of practice will invite the Civil Society to share the best practices and enhance the knowledge of open data on the wider commercial/procurement community.

● Sponsor a data use conference The data use conference focussed on data use by contracting authorities, suppliers and civil society. It will showcase the new data that will be available and how it can be used and improved in line with the data strategy and the National Procurement Policy Statement (the current statement is located here).

● Research on benefits and costs Include civil society in the evaluation of the benefits and costs of implementing the reforms. This is currently being scoped and details will be amended at a later date.

Our Deliverables (Deliverable | Expected Outputs | Expected Completion Date | Stakeholders)

Procurement Act comes into force | New legislative framework for public procurement in the UK | Effective [TBC] 2024 | Public Sector Contracting Authorities Suppliers Civil Society

Introduce Secondary legislation | Detailed regulations under the Act laid and passed | Effective [TBC] 2024 | Public Sector Contracting Authorities Suppliers Civil Society

Roll-out the Learning and Development Programme | Proactive support for procurement professionals through knowledge drops and practitioner training | Effective [TBC] 2024 | Procurement professionals

Deployment of the digital platform | Phased implementation of notices | Phase 1 Effective [TBC] 2024 Phase 2 Effective [TBC] 2025 | Public Sector Contracting Authorities Suppliers Civil Society

Publish transparency user guidance on the topics raised by civil society in the NAP consultation | The guidance will provide a user friendly explanation of how the aspects of reform of interest to civil society will work in practice | Spring 2024 onwards | Cabinet Office Civil Society

Publish regular updates on system readiness | Publish and update a list of eSenders who have committed to implement integration work | Spring 2024 onwards | Cabinet Office

Overseeing compliance with the new legal regime | Monitoring of data by the Procurement Review Unit (PRU) which will be responsible for overseeing compliance with the new legal regime | Effective [TBC] Spring 2025 | Cabinet Office Civil Society

Develop a Data Strategy | Set out the long term direction of the data aspects of public procurement reform | Autumn 2024 | Cabinet Office Civil Society

Create a civil society led open contracting community of practice | Forum for sharing experience of reforms from a civil society perspective | Spring 2024 | Civil Society Cabinet Office

Sponsor a data use conference | Joint sponsorship to develop understanding of data publication and use | Autumn 2024 | Civil Society Cabinet Office

Evaluation of the benefits and costs | Civil society input to Cabinet Office work on assessing impact of reforms | Ongoing | Cabinet Office Civil Society

Our Milestones (Milestone | Expected Outputs | Expected Completion Date | Stakeholders)

L&D Programme goes live | Appropriate training for public sector and suppliers | TBC [Q3 23-24] onwards | Contracting Authorities Suppliers

Secondary legislation laid and passed in Parliament | Detailed regulations for Phase I | TBC [Q1 23-24] | All

Central Digital Platform Deployed | Phase I platform in place for the start of the new regime. | TBC [Q4 23-24] | Cabinet Office

New Procurement Act regime goes live | New UK public procurement legislation comes into force | TBC [Q3 24-25] | All

Publish transparency user guidance | Publish guidance | TBC [Q1 24-25] | Cabinet Office Civil Society

Publish regular updates on system readiness | Publication on gov.uk Updates | TBC [Q4 23-24] TBC Quarterly updates | Cabinet Office

Overseeing compliance with the new legal regime | Monitor the data being published by contracting authorities to identify systemic or institutional breaches that may result in an investigation | TBC [Q1 25-26] | Cabinet Office

Develop a Data Strategy | Discovery Initial draft for review by community Publication on gov.uk | TBC [Q1 24-25] TBC [Q3 24-25] TBC [Q4 24-25] | Cabinet Office Civil Society

Create a civil society led open contracting community of practice | Agree programme scope for community First meeting | TBC [Q4 23-24] TBC [Q1 24-25] | Cabinet Office Civil Society

Sponsor a data use conference | Agree agenda for the data use conference. First UK open contracting data use conference. Review and decision point on follow up conference. | TBC [Q1 24-25] TBC [Q3 24-25] TBC [Q4 24-25] | Civil Society Cabinet Office

Evaluation of the benefits and costs | Scope out research into the benefits and costs of implementing the reforms with civil society | TBC Q3 25-26 | Cabinet Office

Action Plan Review

Commitment 1: Open contracting [Cabinet Office; Open Contracting Advisory Group]

For a complete description of the commitment, see Commitment 1 in the action plan here.

Context and objectives:

A third of all public expenditure in the UK, about £300 billion, is spent on procuring goods and services annually. ^[1] The UK has used past OGP action plans to enhance the transparency of how these funds are spent. In the fourth action plan (2019-2021), the government required all contracting authorities to implement the Open Contracting Data Standard (OCDS) for data on buyers, suppliers, contracts, spending and performance. This was expanded in the fifth action plan (2021-2023), where the government improved the quality of public contracting data and mainstreamed the OCDS on the national portal ‘Contracts Finder.’ Other objectives of the fifth action plan included creating a central digital platform with supplier registration functionality that is expected to replace Contracts Finder in due course, ^[2] and introducing primary and secondary legislation accompanied by training and development to enforce heightened transparency in public procurement. ^[3]

The commitment in the sixth action plan will extend these efforts. It aims to implement the Procurement Act 2023, which will replace the EU regulatory regime for public procurement in England, Wale and Northern Ireland. The Act received Royal Assent on 26 October 2023 and is expected to come into force in October 2024. Among other things, the Act aims to make it easier for small businesses and social enterprises to participate in public procurement, takes tougher action on underperforming suppliers, excludes suppliers who take unacceptable risks, and requires the publication of a wider range of procurement data from planning through to the implementation stage of procurement in a standard, open format using the OCDS. Other objectives of the commitment include developing secondary legislation to enable implementation of the Act, supported by a “Learning and Development Programme” for anyone whose work touches on procurement, including procurement and commercial practitioners and suppliers. Lastly, the commitment will develop a civil society community of practice, hold a data use conference, and develop strategies for data use.

During the co-creation process, the working group for open contracting convened regularly to discuss the deliverables for the commitment. The working group was co-chaired by both a civil society representative and a Cabinet Office representative responsible for overseeing the implementation of the Procurement Act. The consultations for the commitment coincided with the drafting of the Procurement Act, where stakeholders could provide feedback on both the bill and the accompanying regulations. This alignment meant that the Cabinet Office was able to engage with diverse stakeholders. Stakeholders noted that the co-creation process for this commitment could be used as a model for engagement between government and civil society during co-creation. ^[4]

Potential for results: Substantial

The commitment’s potential result is substantial, as it will transform the legislative framework governing procurement in the UK. Through a comprehensive overhaul of existing laws, the commitment will bolster accessibility, transparency and efficiency in procurement procedures. By consolidating fragmented procurement regulations into a coherent single legal framework, the Act simplifies compliance and promotes better understanding among businesses and suppliers.

The Procurement Act introduces a centralised digital platform that will, in time, consolidate the functionalities of Contracts Finder and Find a Tender Service into a single platform. Centralising registration, supplier information and Find a Tender (noticing) that will streamline the process of accessing all contracting-related data. This platform will provide access to a wealth of data at earlier stages, including information about the pipeline of contracts and later stages, offering insights into contract performance. Additionally, it could improve visibility into the identity of providers and contractors, consolidating notices and information for suppliers into a single accessible location. This comprehensive data ecosystem represents a significant advancement for transparency and management within UK government departments, which are often compartmentalised. Furthermore, the increased availability of information will give civil society a deeper understanding of contracting issues, facilitating greater engagement and advocacy.

The Procurement Act further streamlines the bidding process and introduces enhanced reporting requirements, significantly improving transparency. Additionally, the Act mandates authorities to publish post-award contract management reports on supplier performance against KPIs for contracts exceeding £5 million on the Find a Tender Service (FTS) at least every 12 months during the contract period. Furthermore, authorities are required to publish various notices on the FTS, including contract details and termination notices. These enhanced reporting requirements, now consolidated in one central place, are designed to instil trust in procurement processes, ensuring the responsible use of public funds.

The Procurement Act aims to foster fair competition, promote supplier diversity and enhance value for money. Notably, Section 68 of the Act mandates that SMEs receive timely payments within 30 days, aligning with the UK’s prompt payment code. ^[5] This addresses the issue of delayed payments, which adversely affect SMEs, as reported by Barclays in 2022, impacting 58 per cent of SMEs and posing financial burdens. ^[6] Additionally, authorities are obligated to publish payment compliance notices biannually.

The Procurement Act requires the publication of advertised tenders and contract details notice above the low value thresholds of £12,000 (central government) and £30,000 (all other contracting authorities) on the central digital platform rather than on Contracts Finder. Combined with the introduction of supplier information, allowing suppliers to store and submit their commonly used supplier information via the central digital platform, these measures enhance the visibility of business opportunities for SMEs, simplifies the tender process through the Central Digital Platform and reduces upfront costs for suppliers bidding for public contracts (e.g. by allowing evidence of required insurance cover at the point of contract award rather than during bidding, SMEs can avoid unnecessary upfront costs.). ^[7] The Act’s noticing regime imposes a substantial increase in the obligation for contracting authorities to publish procurement information, offering suppliers enhanced visibility and opportunities for competitive positioning or legal action, particularly when mandatory notices reveal direct awards or beneficial contract modifications to competitors.

The potential benefits of the Procurement Act for SMEs are significant. Despite comprising approximately 99.9 per cent of private sector businesses, ^[8] SMEs received only 26.5 per cent of supply chain spending in the 2021-2022 financial year. In 2015, the UK government outlined its objective for £1 out of every £3 in procurement funding to be allocated to SMEs by 2020 to support small businesses and foster economic growth. However, the government has missed this target every financial year since. Facilitating transparency of the government procurement process through the Procurement Act is poised to help the UK achieve this objective.

The commitment will facilitate the delivery of the Act. For example, to facilitate compliance, the Act establishes the Procurement Review Unit (PRU), composed of independent procurement experts tasked with investigating potential challenges in procurement processes and offering advice. Additionally, the government has formed the National Security Unit for Procurement (NSUP) within the Cabinet Office, which aims to support the Act’s provisions to exclude and bar suppliers posing a threat to national security. ^[9] This could enhance transparency and accountability by providing independent oversight and expertise in addressing procurement challenges and ensuring national security concerns are appropriately managed. This could promote fairness, integrity and public trust in the procurement process.

In tandem with the Act, efforts have been directed towards crafting secondary legislation to support the Act, with two consultations on draft regulations during the summer of 2023 and a report from the government on consultation on the draft regulations. ^[10] These regulations underwent parliamentary scrutiny, with the draft legislation laid before Parliament on 25 March 2024 and made on 22 May 2024. The Statutory Instrument (a form of secondary legislation) has been made available, bringing some elements of the Bill and the wider regime into effect. ^[11] The initial set of guidance on the Act deals with contracting authority and covers procurement definitions, valuations of contracts, thresholds and exempted contracts. ^[12]

The commitment also includes the delivery of a Learning and Development (L&D) Programme to support those working within the new regime. This commenced in October 2023 with knowledge drops for contracting authorities and is ramping up throughout 2024 in preparation for enforcing the Act and regulations due to take effect in October 2024. ^[13] The other components of the L&D programme include self-guided e-learning modules for contracting authorities to comprehensively understand each element of the new regime and deep-dive webinars for practitioners to gain expertise in operating within the new regime. ^[14]

Opportunities, challenges and recommendations during implementation

With the recent passing of the secondary legislation guiding the Procurement Act, the following recommendations are provided to facilitate implementation, ensure compliance, and optimize procurement processes. Firstly, there are concerns regarding the quality of data that will be integrated into the system. [15] Secondly, uncertainties surround the adoption and response to Key Performance Indicators (KPIs) by contractors, highlighting the need for further examination of their effectiveness. [16] Thirdly, the involvement of third-party procurement data providers presents both opportunities and challenges. While effective management and updating of procurement data could enhance the system, delays or complexities in data input may pose obstacles, particularly for local councils reliant on third-party systems. [17] Additionally, despite provisions for training, the lack of additional resources and funding may hinder organisations, especially local government entities already facing resource constraints.

The effectiveness of the Act depends on stakeholders possessing adequate skills and technological resources to use available data effectively. There are concerns from civil society members regarding potential increases in compliance burdens for contracting authorities and suppliers. [18] Additionally, a notable gap exists between current procurement practices and governmental aspirations, prompting questions about the project’s ambition. Addressing these concerns will be crucial for maximising the Act’s potential impact on procurement transparency and efficiency. The IRM offers the following recommendations to the Cabinet Office: